Governor Mitch Daniels announced today he will use part of the state’s larger-than-expected budget surplus to give nearly all state employees a bonus. The one-time bonus checks will be merit-based. The state will use performance reviews to issue bonuses from $500 – 1,000. Daniels says he wants to honor those who’ve helped create one of the country’s most stable fiscal states.

The bonuses will cost the state roughly $15 to 20 million. Daniels also says he is concerned about the federal debt ceiling negotiations and what he calls Washington’s inability to reduce spending. To prepare for a potential federal default, Daniels says Indiana will continue to pad a state budgetary reserve.